Meet the ‘Plebs’ Who Power Bitcoin’s Payment Network, Plebnet

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The Lightning Network is the basis of Bitcoin payments from El Salvador and Twitter. This network is mainly managed by ordinary people who manage individual channels and nodes. Meet the community behind the network who explains how they got started and how they make a profit.

When the headlines announced that El Salvador and Twitter were rolling out bitcoin payments, very few people peeked under the hood, but those who did would have found something quite surprising.

The flash network that powers these payments is not run by Big Tech, but rather by ordinary people, who have come together to help build a stable and fast payments network for bitcoin.

In recent years, bitcoin has exploded in popularity, but it has been adopted by the general public more for its qualities as a store of value than a digital currency, given its proof of work consensus system and price volatility. .

The Lightning Network sits on top of the Bitcoin Network and speeds up micropayments between users who set up channels to enable payments between them.

In some cases, parties may not have direct access to the channel they wish to use. Thus, the network will then find the shortest path using the routing nodes. A node is actually software that helps process payments between channels and earns its manager a small amount of bitcoin in return.

Most of these nodes and channels are set up by individuals in their homes. Plebnet is a group behind the widespread adoption of the network.

Meet the “plebs”

Plebnet is an online community that works together to help people get on the Lightning Network and troubleshoot technical issues. A plebe, in bitcoin parlance, is someone who stacks satoshis (sats), the smallest unit of bitcoin, which is equivalent to one hundred millionth of a single coin (0.00000001 BTC).

The group started earlier this year on Clubhouse, where less than a dozen people gathered to discuss challenges and ideas.

A few months later, they had over 5,000 members and around 1,000 nodes, for a total of 1,000 bitcoins. That’s almost a third of the lighting network, said KP Shukla, a tech professional who is one of the early members.

“I’m still not sure who started it, if you ask different people you’ll get different answers,” said Twitter user Dread, who chooses to keep his personal information private. “But I’m glad it exists. I feel like they’re part of the family, what’s strange is that most people, I sometimes don’t even know their names, letters or numbers. . “

For a collective whose origins are hazy, it has a wealth of information, from a wiki page that pools their collective knowledge, to a bustling Telegram community where messages come and go.

“We spend all day, everyday, teaching people what we’ve learned,” said Erin Malone, who runs a small production company and is also a member of Plebnet. “It continues to be passed down the line. We teach people, they teach people. We pay it back and forth.”

Within 10 weeks of starting a node, Malone was already making a profit.

The group is now growing so large that splinter groups have formed, each with their own terminology.

—Erin Malone (@ErinEMalone) October 8, 2021

Insider spoke to four key members of Plebnet to find out how to get involved and what’s next for the network.

Why are they doing this?

Most of the members got involved with Lightning once they realized how it could help the underbanked.

Making payments between developed and emerging markets can be an incredibly frustrating process that many members have faced.

“I know that in my companies, when I send fast transfers to my other companies abroad, it is always a nail biting thing,” said Vaibhav Shukla, a 49-year-old man who runs his company. own technology company. “… And here, instantly, the amounts are swapping and it made me jump into technology and then once I got into it, I realized the potential and the power of it.”

Plebnet Member Vaibhav Shukla Vaibhav Shukla

It’s not just about transaction speed, it’s also about lower fees compared to traditional systems.

“If they have a cell phone, you now have a way where people who don’t have a lot of financial wealth, they can actually exchange peer-to-peer payments and have a store of value in that asset, which is really very strong and hard money, ”said KP, who recognizes the power he could bring to his home country, India.

As countries like El Salvador embrace lightning for payments, node managers feel responsible for providing a rock-solid network, KP said.

“When people are very proud of their node, they try to hold it down because they don’t want to be the node when a payment has failed,” he added.

Not everyone is so selfless. Some members have joined just to make a profit, KP said.

To start

Running a node for profit only comes from running it efficiently, which is not the typical place to start.

“There is definitely a learning curve and making a knot requires a lot more care and attention in the beginning,” said Malone, who responded via email.

One of the easiest ways to run a Lightning Node is to use Umbrel, a personal server. It can be installed on a Raspberry Pi, where a starter kit costs around $ 100, or purchased as a plug-and-play server through Bitcoin Machines for $ 429.

KP Shukla, Plebnet member, KP Shukla Lightning Knot

Beginners should focus on basic node management, like experimenting with channels and setting and adjusting fees, Malone said. She estimates that she spent about four to five hours a day experimenting at first. Now, managing your node takes about 30 minutes per day.

KP also spends less than 30 minutes a day developing several scripts to help automate node management.

Make a profit

Once the nodes are managed efficiently, then it is possible to secure the profits.

Since the height of the summer, Malone’s sats profits have fallen nearly 50% due to network growth, but she says that’s not necessarily a bad thing.

“Fast forward a few years, when everyone is using lightning and the price of bitcoin exceeds 1 million per coin, it will be interesting to see what our profits are,” said Malone. “What is going to grow faster, the price of bitcoin in fiat, the lightning knot runners or the lightning traffic? Ultimately the number of sats we make will be much less, but the power to purchase of sats will be much higher. ”

Plebnet Member Erin Malone Erin Malone

Making a profit isn’t an on / off switch, it involves constant learning and adjustment, Twitter user Dread said.

“It depends on how much liquidity you have, it depends on what fees you decide to set and even after that something might change for you as this is a competitive zero sum game,” they said.

Some days no profit could be made because a cheap channel was opened, Dread said. However, around 100 sats is about the average they can do every two hours, they added.

“Some people say it’s like a Tamagotchi. Initially you feed them and you are overwhelmed by their presence, but once you learn the trick you can both live in beautiful harmony,” said Vaibhav.

The Vaibhav node is now about 90% automated and it is generating a yield of about 1% to 2% per year. However, he said it would be possible to push him to get yields of around 5%. To achieve this performance, node reputation and adherence to best practices are important, he added.

And after

With any opportunity that offers profit comes marketing. If companies step in and start industrializing how nodes work, it could threaten the decentralized, peer-to-peer nature of lightning.

Vaibhav said commercialization could take place, but that does not mean that individual node runners will fall on the margin as it is a liquidity business. He also points out that individuals will remain in control as they will keep their own keys and can switch departments in the blink of an eye.

Dread believes that large companies will not even have an incentive to create nodes, as they will already be heavily controlled by individuals. He expects that at some point everyone’s internet router will have a Lightning node as part of their payment rails, which will help grow the global network.

Erin Malone’s Lightning Knot, Plebnet Member Erin Malone

However, members said wider adoption will require improvements in privacy, security and education.

Adoption is already underway by small businesses. Plebnet has created a group specifically to answer these questions because of the demand. In the long run, they expect running a Lightning node to be a part of everyday life, with node configuration and management only taking a second thought.

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